course material

1. MN3542 Business And Employment Law
Answers:
Introduction
The Law of Property has undertaken to provide guidelines regarding the implementation of
any deed or written document related to matter of sale or rental activity of a property.
Whereas, these deeds or written documents mostly create a contractual relationship
between the party. There are so many facts that intersects between the law of property and
law of contract (Farran, S. and Cabrelli, D., 2006).
This report shall enlighten the related facts that can affect both, Property Law as well as the
law of contract. This report is about to discuss the relevant consequences of Law of
property where the contractual exchanges of the property included. When a single case
involves both these laws, different opinions and perspectives emerges from that and in
every case, it gives a new face to the conclusion (Wolff, 2020). This study shall discuss some
new aspects that relates the Law of Property to Law of Contract as discussed in Section 2 of
Law of property (Miscellaneous Provisions) Act, 1989.
Section 2 Of Law Of Property (Miscellaneous Provisions) Act, 1989:
This section provides the provisions that gives the requirements that applied while entering
into the contract for matters related to sale or disposition of a property. This section states
that the contract must be in writing signed by the parties that include every clause related
either to sale or to the constitution of any interest. In case where the particulars of sale or
disposition have mentioned in any additional document, that document has to be signed by
both the contracting parties (legislation.gov.uk, 1989).
Consequences
The contracts resulting sale or disposition of interests of any property has different
scenarios that shall be discussed in this report:
Consequences As Per Section 2 (1)

2. Section 1 of the act provides that the contract made for the sale or disposal of interests must
be in writing including all material facts related to the sale or disposition.
Francis V. F Berndes Limited:
This case established the ruling of section 2 by focusing on the implementation of written
contract. The parties informally set the terms on a letter. The Court held that the contract is
void-ab-initio as it was not in compliance with Section 2 of the Law of Property
(Miscellaneous Provisions) Act, 1989.
Written Deeds Or Instrument Of A Company
The written deeds or instrument that authorises the company to rent or buy or create any
interest over a land shall deemed to apply the provisions of the section 2 of the Law of
Property (Miscellaneous Provisions) Act, 1989. It has to be in writing and executed with the
common seal of the company (LC253, 2015).
Consequences As Per Section 2 (5)
Section 2(5) of the act provides different scenarios where section 2 does not apply. Any
contract that took place in necessity replicate the requirements of section 2 of this act.
There are following exceptions in which Section 2 is not applicable;
where, the case is of short lease, as prescribed in section 54(2) of Law of Property Act, 1925.
where, the contract has made in the course of public auction.
where, the contract has made under the Financial Services and Markets Act, 2000.
Note: nothing shall have impact over the contracts resulting the constructive or implied
trust (legislation.gov.uk, 1989).
Common Law And Equity
Yaxley V Gotts:
This case has established a fact against section 2 of the act and for the aspect of equitable
remedies. The judgement on this case stated the importance of the equity over the
provisions of the Common Law In this case the oral terms become valid and states the
relation between law of property, constructive trust and propriety estoppel (Moore, 2000).
In case where, the statutory rule does not intersect and create clash between it’s
applicability and equitable remedies, the overruling of section 2 shall not apply. If the
intention of a contractual party is not to deceive the rights of the other party, and took a
step according to the statutory rules, the rule of constructive trust shall not overrule the
statutory provision. The availability of the principle of proprietary estoppel shall not be

3. awarded in these cases (Moore, 2000).
Oates V. Stimson, (2006):
This case has also ruled over the principle of implied and constructive trust over the
statutory rule given in section 2 of the Law of Property (Miscellaneous Provisions) Act,
1989. In this case, Mr Stimson get the rights over the property as orally discussed with Mr
Oates. The Court held that Mr Stimson has completed his part of obligations properly and
has right to own the property. In this case, section 2 does not protect the person who is
already a co-owner’s (Mr Oates) rights and give the judgement in the favour of Mr Stimson.
Advantages And Disadvantages Of Section 2
Advantages
Section 2(1) provides a concrete provision that gives a clear view of contract. If the contract
is in writing, less chances of frauds and mislead shall lead. A written contract in sale or
disposition of interest make a clear arrangement for both the parties. It is more accurate
and detailed in nature that protect the rights of the parties with complete written evidence
and is certain about the obligations of the party (Case of Oates v Stimson).
Whereas, there are numerous advantages of it’s exceptions too. Section 2(5) provides
guidelines that also talk about the scenarios where it is necessary to protect the rights of the
party, going beyond the limitations of a contract. The equitable remedy could provide by the
Court in exceptional cases. Principle of proprietary estoppel also helps the person to obtain
his rights through overruling of the statutory rule (Case of Oates v Stimson).
Section 2(5) also states that provisions of section 2 shall not apply on immediate contract
that does not have any future application. This clause prevents the party from the vague
attempts of creating obligations (legislation.gov.uk, 1989).
The concept of implied and constructive trust also have importance in this section. Hence, if
the person is having any obligation or rights due to the orally spoken that builds the
constructive trust shall be valid and could have equal legal validity as written
contract (Haentjens, 2012).
Disadvantages
Section 2 is dependent on the different scenarios. It is not specific and the judiciary shall
decide where this section shall apply and where it’s exceptions shall apply as per the
demand of the case. In many cases, the relationship of contract law and property law
collides. The provisions of Section 2 also include the terms like implied and constructive
trust. These concepts make this provision uncertain and relies on case to
case (legislation.gov.uk, 1989).

4. The relationship of contract law and property law are relating as per section 2, whereas
these two laws are very different in nature. This creates a confusion for the parties that on
what law they need to rely on (Farran, S. and Cabrelli, D., 2006).
Practical Effect Of Section 2 On Purchaser:
The purchaser while purchasing house in England and Wales has to be certain about the
property. While purchasing the property, he/she has to keep the record on the owner of the
property. He/she has to be take care of the property papers and has to check whether no
obligation has remained partly performed by the owner towards the joint owners.
The purchaser after checking every aspect related to the property, shall demand for signing
a written contract that includes every related material fact of the contract of sale. The
purchaser should read every clause mentioned in the contract and then sign the contract.
The contract must be specific about the sale price, term, property description, method of
payment, instalments to be paid for purchasing the property and other details about the
property.
The purchaser of the house must perform his/her part of obligation properly and should
not state any false statement in front of seller. The purchaser has to make clear everything
and understand every statement made by the seller so that he/she can claim the equitable
remedies in case the seller is not sticking on his words and not transferring possession of
the property.
Conclusion
Section 2 of the Law of Property (Maintenance Provisions) Act 1989, states that a written
contract raising specific rights and obligation of the parties in the case of sale or disposition
of interest of land is must to take place. It is conclusive in nature, still having exceptions
mentioned in Section 2(5). The exceptions of section 2 protect the rights of the contracting
parties in case they are being harmed through oral terms or part performance. Hence,
section 2 could be overruled by the principle of equity and proprietary estoppel. From these
sections it can be concluded that a purchase has to enter a written and valid contract while
purchasing any property, so that he could protect his/her rights after performing his part of
obligation.
References
Farran, S. and Cabrelli, D., 2006. Exploring the interfaces between contract law and property
law: a UK comparative approach. Maastricht Journal of European and Comparative
Law, 13(4), pp.403-443

5. Francis v F Berndes Limited (2011) EWHC 3377 (Ch)
Haentjens, M., 2012. Between Property Law and Contract law: the case of security. s.l.:Otto
Schmidt/De Gruyter european law publishers.
Law of property (Miscellaneous Provisions) Act, 1989
LC253, 2015. The Execution Of Deeds And Documents By Or On Behalf Of Bodies Corporate,
s.l.: The Law Commission.
legislation.gov.uk, 1989. Law of Property (Miscellaneous Provisions) Act 1989. [Online]
Available at: https://www.legislation.gov.uk/ukpga/1989/34/section/2
[Accessed 2022].
Moore, I., 2000. Proprietary Estoppel, Constructive Trusts and Section 2 of the Law of
Property (Miscellaneous Provisions) Act, 1989. The Modern Law Review, 63(6), pp. 912-
917.
Oates v Stimson [2006] EWCA Civ 548 (16 May 2006)
Singer, J.W., 2022. Property. Wolters Kluwer Law & Business.
Wolff, L.-C., 2020. The relationship between contract law and property law. Common Law
World Review, 49(1), pp. 31-55.
Yaxley v Gotts [2000] ch 162